Paul Buitink, Professor at the Department of Economics at the Universidad San Francisco, Quito, Ecuador and marketing manager for the Dutch Clevercoin exchange, strongly feels that the government should not be involved when it comes to creating money. In fact, Mr. Buitink also believes that we should not try to keep the current monetary system in tact either.
Flaws in the current Monetary System.
The current economic crisis is not a result of insufficient regulation, but rather the result of years of bad regulatory measures. Banks have been allowed to make a mess of the monetary system because of improper rulings and “higher up” institutions failing to keep an eye on the situation. Central banks, all kinds of privileges and a severe lack of competition in the monetary space have lead to the mix up of credit and money. This has also allowed banks and governments to take huge risks, which in turn lead to an even worse situation affecting most of the world’s population.
The Soviet Union has proven that central planning does not work. Despite that historical warning, bureaucrats still pretend to be all-knowing while ignoring their terrible track record over the years. We are talking about people who couldn’t even centralize the production of shoes for the entire Soviet Union, let alone how they would manage the allocation, quantity and interest rates of money.
Because central banks managed to keep interest rates too low for too long, housing bubbles occurred in the United States, Spain, Ireland and even The Netherlands. As Paul Buitink so aptly puts it , the world is too complex for old, gray men to plan its course while sitting in their ivory towers.
Statements such as “money belongs to all us, so the government should regulate it” don’t sit too well with Mr. Buitink. After all, this ideology would allow the government to even control production of food and shoes. Simply because something is very important to all of us doesn’t mean the government should be in control of it. Here is an example : wars are being fought by governments and “allied companies”, not by peace loving citizens. To take things one step further, these wars are being possible thanks to printing presses, which are in control of….the government.
According to several economists, there is nothing wrong with the current monetary system. These economists strongly believe that “all money is actually debt, so what does it matter?”. Granted, resources such as gold, beads and even Bitcoins can be viewed as a “claim on future production”, but there is a major difference compared to debt money created by the banks themselves.
The Success of Disruptive Currencies
Whichever way you want to look at it, the current monetary system in which governments and banks spoon in bed together is not doing the average person any favors.Banks can create “new money” out of thin air, and they can loan money at very cheap rates from central banks, which is in turn loaned to civilians at outrageous interest rates. Once things go awry, the banks are the first to bed for money, as no one is capable of solving the problem. Unfortunately, this is becoming a vicious circle as more time elapses.
But what if people could decide how they want to pay for things and create a true free market? Plenty of innovation is being brought to the table in the world of cryptocurrencies, as Bitcoin, Ripple and Ethereum are on the right track to create their own free markets. Furthermore, there are local currencies such as the Bristol Pound, crowdfunding initiatives and peer-to-peer loans. The key to fixing the problem lies in the decentralized and transparent nature of these flourishing currencies.
New types of currency, such as Bitcoin, allow anyone in the world to pay anyone else in the world instantly, and at a small cost compared to more traditional methods. Without governmental censorship and a bank asking for any personal details, financial freedom is within our grasp. In fact, more and more governmental roles could be replaced by decentralized structures with transparent rules and pre-programmed consensus rules.